FACTORS INFLUENCING CUSTOMER RETENTION IN SUDANESE MOBILE PHONE SECTOR: TESTING AN INTEGRATED MODEL
CHAPTER ONE
Introduction A firm’s value is derived from its financial, physical and intangible assets. With physical and financial assets fast becoming obsolete, firms are turning to intangible assets as a way to gain advantage over competitors. Intangible assets give an organization a competitive advantage because they are hard to duplicate and imitate. Having realized the importance of human capital, customer capital, social capital, and intellectual capital, companies are embracing different strategies with the aim of improving the welfare of their employees. A good example is the Southwest Airlines which emphasizes on training and development to provide its employees with skills to perform multiple jobs. By enhancing its human capital, Southwest Airlines has achieved a competitive edge over other airlines that have similar or even greater levels of financial and physical assets. Companies such as Southwest Airlines have also developed a culture in the work place that encourages employee’s sense of ownership through shared decision making and leadership (Bauer & Erdogan 2009). In addition, such organizations have developed proper compensation programs to motivate their workers.
Background
Starbucks Corporation was started in 1971 but it has since expanded to more than 16,000 locations in 50 different nations. The company was started by Jerry Baldwin, Zev Seigel and Gordon Bowker, who were lovers of fine coffee and exotic teas. Initially the business was registered as Starbucks Coffee, Tea and Spice but it was later renamed Starbucks Coffee Company. The company concentrates on selling high priced quality coffee to urban dwellers and those seeking sophisticated lifestyle experiences. From a humble beginning Starbucks Corporation has become one of the most rapid growing corporations in America. The company is not only renowned for its quality coffee but also its quality customer service and quality environment. As per April 2010, the company had 142,000 employees, worldwide (Booth & Strudwick, 2012).
The company depends on innovations to reduce transaction times. Some of the notable innovative products that the company has introduced include automatic espresso machines, pre-paid cards, and wireless internet service. The organization is very efficient and has registered monumental financial growth since its inception. Its strong financial performance allows it to create a positive working environment to the employees. In addition, the company uses its financial assets to pay its employees higher than the industrial standards. The company has also invested heavily on research and development and to expand its operations to foreign countries.
Although the company has registered huge success in the past, it relies heavily on its home market. This is an indication that the company needs to transform itself into a global organization in order to improve its revenue. At the same time, the company relies on a rather narrow product. In this regard, the company offers beverages as the main product. This is detrimental because relying on one product group makes the corporation vulnerable to changes in customer preferences. The corporation can address these threats by increasing its international presence. By so doing, the corporation should be able to tap into the still growing market for specialty coffee. In this regard, the company is already considering increasing its presence in BRIC countries where there is a sizable share of upper and middle classes.
Despite these opportunities, the corporation faces stiff competition from other players that are entering the coffee market. Already, Starbucks faces huge threat from McDonald’s which has established McCafes in numerous countries. Lower-priced competitors such as McCafe and Dunkin’ Donuts are no doubt likely to negatively the original Starbucks brand. In addition, unlike Starbucks, McCafe and Dunkin’ Donuts focus on multiple products which make them less susceptible to the escalating prices around the world. The company has also acquired a negative image from the media, a situation that is likely to affect its attractiveness especially to the young consumers. Most importantly, the 2008 economic crisis led to lower consumer spending for upscale goods including coffee. It is expected that the company could leverage on its workforce to increase the quality of products and services. To increase the working conditions of its employees Starbucks has initiated several strategies which will be evaluated in the rest of the paper.
Employee engagement
Weber (2005) defines employee engagement as the degree to which employees are fully involved in their work and the company. When employees become highly engaged, firms benefit from higher productivity, better customer service and lower turnover. Unfortunately, a survey conducted by Hilton (2008) indicates that in the U.S., 13% of the employees are disengaged, 76% are moderately engaged while 11% have high levels of engagement.
Employee engagement is influenced by many factors some of which are detailed below.
Team work
In each store, employees work in groups of three to six. Working together allows the employees to better serve the customers. The small teams of three to six, enhances communication while reducing role ambiguity. Small teams at the Starbucks also work well for the employees because they are able to arrive at the right decisions as fast as possible. Having a small number of workers in each store is also advantageous in that the intra-team conflict is minimized. All the employees within each Starbuck’s store work towards one common goal and as such the chances of natural disagreement and personal frustration are minimal. In addition, working in small teams reduces tension and unhealthy competition. This is important given that Starbucks Corporation relies heavily on good reputation to win over customers.
Improving team-work in the company
Although Starbucks continues to provide quality services to its customers through small teams of three to six workers, this strategy has led to work overload. To improve the situation there is need for the management to increase the number of team members in each store. Alternatively, the corporation could create a network of well trained baristas for temporary deployment on a need-to-need basis. The baristas could be sent to stores where workers are overloaded or where there is a temporary shortage of staff members. Finally, in order to improve the experiences of the team members there is need to give the managers the autonomy to devise their own training and development programs. However, these programs should meet the standards and guidelines set by the corporate headquarters.
Corporate culture
Starbuck’s corporation respect for workers is reflected in one of its six mission statements which is “…to provide great work environment and treat each other with respect and dignity.” (Serwer, 2004). The management always strives to have a satisfied workforce by holding constant meetings with the employees. When the workers have any grievances they can easily approach the management for remedy. On a more important note, Starbucks’ employees play an important role in the decision-making process. In particular, the employees are allowed to make decisions without needing any clearance from the management. Open communication in the company is encouraged by the matrix organizational structure. This flatter organizational structure in the company ensures information is easily communicated between the existing levels.
The management is required to treat the workers equally. In order to create a culture of cooperation and enhance interaction, the managers are required to co-work with the basic level staff in the front line. Constant interaction allows the management to identify any needs that the workers might have. The suggestions of the employees in every store are appreciated when formulating policies and plans to achieve their goals. Most importantly, the leaders help the employees to enrich their careers.
Starbucks Corporation always strives to create a culture that respects diversity and inclusion. The need to respect the values of its employees has become necessary because the organization has established its presence in many diverse countries. To promote the culture of inclusion among its leaders and its employees, the corporation uses the help of the following partner groups: Starbucks Access Alliance, Armed Forces Network, Black Partner Network, Asia Pacific Network, Pride Alliance Network and Women’s Development Network.
The corporation’s culture stresses the importance of people over profits. This aspect of the company’s culture was evident during the incident that happened in 2004. At the time, three employees were killed during a robbery at a Starbucks in Washington. The employees get to learn about the company’s culture through training programs. As a sign of being remorseful to the victims, the CEO declared all future profits from that store to be channeled to charities involving burglary investigation. The philosophy of respecting people over profits is also evident in the way the company deals with the protesters. Cases of discontentment among its workforce are always solved by positive agreements between the affected employees and the management. Becausing of respecting and constantly engaging the dissatisfied workers, Starbucks has been listed as one of the “100 Best Companies to Work For.” In order to pass over its culture, Starbucks readily embraces leadership development to identify future leaders and managers. It is also worth noting that the company is an Equal Employment Opportunity Employer and all partners are treated equally during the recruitment process. This process also applies during transfer, promotion, compensation, eligibility for promotion and termination.
In order to improve the relations between the employees, the corporation has a comprehensive Anti-Harassment and Anti-Retaliation Policy (Dexter, 2007). The workers are required to use the established “Reports Complaints” process to report abusive behavior to their store managers, district managers of the partners’ resources manager for the region (Pressman, 2007). This procedure is important in the workplace as it protects the integrity of the workers and assures them of their safety. Obviously, commitment from the employee to the employer is likely to improve only when a safe working environment is maintained. To further promote the satisfaction of its employees, the corporation regularly conducts Partner Voice Surveys. Through such surveys the management is able to address areas of concern while improving the employees’ working conditions.
Human resource strategies
According to Boulton, Libert and Samek (2000) human resource strategies refer to practices that are used to influence the employees’ behaviors, attitudes and performance. These practices are pivotal in attracting, motivating, rewarding and retaining workers. Some of the common human resource strategies that are commonly used include recruiting employees, selecting employees, work design, compensation, developing good labor and employee relations and training and development (Cateora & Graham, 2007). The following section will discuss how training and compensation have been used to improve the employees’ working environment at Starbuck’s corporation.
Training and development
According to Serwer (2004) the corporation is revered for its training and development programs. Before any training program is conducted, a need analysis is conducted. After a need a need analysis is conducted, the trainers choose an appropriate instructional technique and then use it train the employees. The employees require the training experience so that they can settle on their jobs well. After the training is conducted, an evaluation is performed by the HR department to assess the program’s strengths and weaknesses for future adjustment. Every employee in the corporation starts his job in paid training known as the ‘First Impressions.” During this sessions the employees how they can create a positive experience for customers.
The employees in the corporation are refereed to as partners. Employees are provided with adequate training in order to produce quality products and services. Training is uniform across all individual stores. However, employees moving from one store to another may face difficulties adapting to the new location because practices sometimes vary. Training is particularly beneficial to the transferred and borrowed partners. Remember also, the recruitment process is sometimes informal which means that recruits must be imparted with the necessary skills before they can start performing their duties. The orientation is carried out by the line management and partner resources department.
One of the common training programs that are tailored for the employees in the Starbucks Corporation is the Barista 100 training program. The Barista 100 training consists of internships, computer aided instruction, internet-based training, and on the job-training. The programs are particularly important to employees who switch primary store locations his program particularly targets the baristas. Another program is the Partner Café, and it a great learning resource for the current Starbucks partners. Through this program employees acquire new knowledge and ideas through formal learning and individual development discussions. The employees are trained by the store managers and established baristas. The Partner Café program is very personalized to meet the individual needs of each employee. According to Tharenou (2001) the first portion of training surrounds first impressions, customers while introducing the employees to the Starbucks experience. Afterwards, the barista then receive the Whole Bean, Brewed Coffee and Tea, and Food Case Training. As part of the program, 16 hours are dedicated towards training employees about bar practices, machine use and drink standards.
Continued training
The baristas undergo continuous training. In this regard, the corporation has a store portal, which has pertinent information about the recipes, tips and news about the company. Alternatively, baristas undergo further training during promotional periods, when a standards change occurs or when products and services are introduced. In this regard, in 2004, the corporation introduced the Coffee Master Program for the staff to learn more about the particularities of coffee. The program uses a blended training approach consisting of on-ob training, online portal work and classes. On-job training entails showing the employees how particular tasks are performed, after which the supervisors diminishes his or her role in training. On the other hand, internet-based training provides the employees with generic information and initial instruction. This form of training advantageous because employees can review the course contents from virtually anywhere. The Starbucks training programs not only gives the employees the necessarily skills to perform their jobs effectively, but all workers are treated equally. Just to illustrate, both the part-time workers and the corporate employees take up similar courses at the start of their career. In this case, if you apply for a managerial position at Starbucks Corporation, you must undergo immersion training which involves working in a Starbuck’s store and learning how to make coffee just like the baristas. To further enhance the skills of the employees, the corporation dedicates a whole day each year during which all stores all closed for training purposes.
Improving training and development programs
Although the available programs are effective for training and development purposes, the employees find it difficult to relate to the traditional idea of Starbucks. In order to address this problem, there is a need to come with more exciting programs. In this regard, the organization should consider initiating an exchange program and it expected that this new initiative is likely to increase motivation.
Another major problem with the current training programs is that they do not address the needs of the transferred and borrowed partners. To address this problem, it is important for the HR department to establish an electronic record detailing the training and performance of all its employees. For borrowed partners, they should report to their temporary stations before the required time, so that they can receive the necessary orientation.
Compensation
The corporation’s philosophy is to reward the outstanding employees. Starbuck’s corporation total package is known as “your special blend” and it offers a competitive pay, bonuses, paid time off, equity in the form of discounted stocks, adoption assistance, domestic partner benefits, free coffee and retirement savings plan (Thompson, Strickland & Gamble, 2007). The partners are also free to join numerous clubs and programs such as the Thrive Wellness program, Elite Athlete Assistance Program, Internal recognition program, and Career sabbaticals (Thompson, Strickland & Gamble, 2007).
One of the biggest challenges for the company has been to maintain a high level of employee performance, to attract a young workforce and give provide the part-time workers with an enabling working environment. To motivate these workers, the CEO thought it wise to extend the health benefits to all employee groups. It was expected that doing so would improve the employees’ confidence, reduce turnover and reduce hiring and training costs. Another important element of the Starbuck’s compensation program is the stock option plan. This initiative was introduced in 1991 by the CEO, Mr. Howard Schultz. By investing in the company, the employees are motivated to increase the sales in order to earn more dividends.
Beside the base pay, and the corporations, gives the employees financial incentives such as stock options, employee discounts and cash bonuses for stores going above the target sales. Although the corporation offers good benefits, it has decided to reduce some of them. This was the case in the UK at the end of the 2012 when the corporation resolved to cut the paid lunch breaks, sick leave and maternity benefits for thousands of British workers. The new contractual terms removed cash incentives and the bonus scheme for women returning from maternity leaves. The move was highly criticized by the workers, trade unions and the UK government. Workers were forced to sign the revised employment terms. This move affected 7,000 coffee shop staff across 750 stores and according to Booth and Strudiwick (2012) who work as reporters for the Guardian, the new changes were being affected in response to an increase in company’s tax bill. Although the revised terms and conditions could be considered necessary under the circumstances, workers were no doubt de-motivated in the process. It is also worth noting that Starbuck employees are not unionized. If problems arise in the work places, the employees are required to adhere to a formal grievance procedure. This has not gone down well with the employees, because they feel they do not have a viable channel through which they air their grievances. The corporation has also been at logger heads with different trade unions all over the world due to its unfair labour practices. A case in point was on 18th August 2007, when the Industrial Workers of the World (IWW) held widespread protests against the corporation. There is also a perception that its employees are dissatisfied and under-appreciated which poses the danger of negative service impairment.
In another different incident, on July 15th 2011, Starbucks’ workers in Chile staged huge protests seeking pay and benefits increases. The strike paralyzed its operations in its 31 cafes in Chile. The strike which was organized by the baristas drew huge support from the Chilean Labour Agency. To prevent such strikes in future maybe the corporation should increase the number of workers in order to reduce the workload.
In America the corporation has been accused of punishing workers for engaging in the activities organized by the Starbucks Workers Union. A case in point was in 2005 when Daniel Gross and another union activist were fired for engaging in protests against the corporation. The corporation has also been by its employees for unfair labour practices in Grand Rapids and Michigan. The corporation has been accused of failing to provide workers with good working conditions, guaranteed work hours and poor pay.
Despite Starbucks anti-union stance, some of its employees in the recent past have successfully become members of the Industrial Workers of the World. A case in point was on June 16th, 2006 when Starbucks employees in Manhattan announced their membership in the IWW Starbucks Workers Union. Similarly, in August 29th 2006, employees in Chicago’s Logan Square Starbucks filed declared their union membership.
Conclusion
The Starbucks Corporation has enhanced employee engagement by initiating extensive training and development programs. In addition, employee engagement has been achieved by increasing the frequency, quality and the number of workplace learning opportunities and employee orientation programs. The training programs and job design creates equality between those in front-line management and low-skilled workers. The culture at the Starbucks encourages interaction and communication between the management and the other employees. By increasing the level of communication throughout the existing hierarchies, the decision-making process and employees’ motivation has been enhanced. Employees’ motivation has also been achieved by giving all employees an attractive pay, stock options and numerous benefits. As a result turnover rate of Starbucks is much lower than other industries on average. However, in the recent past, the commitment of the employees has been affected by the company’s anti-union stance, lack of guaranteed work hours and work overload. The management needs to address these concerns by employing more employees and encouraging the employees to join the IWW Starbucks Workers Union.
References
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